Originally Posted by Delta757

Damn I guess I shouldn't have paid my mortgage early, I lost out on $750m.

Originally Posted by gloopy

exactly. Every pilot knows how to leverage their investments to make eye watering 2-10X market returns, consistently, which is why they volunteer so much free time they could be compounding their millions to fly people around at a loss.

Originally Posted by gloopy

exactly. Every pilot knows how to leverage their investments to make eye watering 2-10X market returns, consistently, which is why they volunteer so much free time they could be compounding their millions to fly people around at a loss.

Originally Posted by Trip7

Berkshire Hathaway is a conglomerate of multiple businesses. Taking the money and investing it in 8-10 cash-flowing businesses with little to no debt and paying a reasonable multiple of that cash flow is much better than paying off a mortgage. All it requires is 4th-grade-level math so one can read an income statement, balance sheet, and cash flow statement. If one is not able or willing to do that, the Dave Ramsey approach, which is better tailored to the financially illiterate, is fair game.

Originally Posted by Trip7

The Laguna Beach Loan Breakdown

​When Buffett bought the beach house, he was already worth millions, but he flat-out refused to tie up his liquid capital in real estate. Instead, he took out a standard 30-year fixed mortgage through Great Western Savings and Loan.

• ​Purchase Price: $150,000
• ​Down Payment: $30,000 (20%)
• ​Loan Amount: $120,000
• ​Interest Rate: Approximately 7.31% (which was the baseline 30-year fixed rate when Freddie Mac began tracking data in 1971)

​The 7.31% Opportunity Cost Arbitrage

​Paying a 7.31% interest rate might sound painful when you have the cash sitting right there to avoid it, but Buffett knew his hurdle rate in the market was vastly higher.

​He took the $120,000 cash he would have used to buy the house outright and deployed it directly into his own compounding engine, purchasing roughly 3,000 shares of Berkshire Hathaway stock instead.

​By the time he eventually listed the Laguna Beach house for sale, the contrast between the two assets was staggering:

• ​The physical house appreciated from $150,000 to a eventual market value of around $11 million.
• ​The 3,000 shares of Berkshire Hathaway he bought with the retained cash had compounded into more than $750 million.

​He willingly paid a 7.31% cost of debt because he knew he could compound the retained equity at an IRR that completely eclipsed it.

Originally Posted by Delta757

Yeah fourth grade education, which is why 95%* of active investors beat the market. Oh wait, it's 95% that don't beat the market.

If it's so easy I'm not sure why you're a pilot and not the wolf of wallstreet right now.

I'm not even arguing that investing beats paying down the mortgage, I'm just making fun of the absurd $750mil example that was thrown out there.

*I don't remember the actual number and am too lazy to look it up, but it's around there.

Originally Posted by Hotel Kilo

I inherited some money end of 1989. I took my inheritance and bought two shares of Berk A. I think I paid like 8k/share. Now it's up to around 722k/share. Total luck. But I had a hunch and decided to roll with it. Stock market is gambling. Seems I got very lucky on that one. I also took a blood bath in the tech bust and again in 2008-10 during the financial crisis. Again, the market is a gamble just depends on your level of sacrifice you are willing to tolerate as the market swings around. We've been on a very good run lately whether that is inflated or not, I don't care, I'm not losing money so that's good for me.

Originally Posted by Delta757

I'd say getting on particular companies or sectors can be. But historically, the entire US market does average healthy returns. Nothing is ever 100% but if very much push back that "investing in the stock market is gambling." Buy the market and chill.

Originally Posted by spaghettilegs

Any Bogleheads in here?

Originally Posted by Delta757

Yeah fourth grade education, which is why 95%* of active investors beat the market. Oh wait, it's 95% that don't beat the market.

If it's so easy I'm not sure why you're a pilot and not the wolf of wallstreet right now.

I'm not even arguing that investing beats paying down the mortgage, I'm just making fun of the absurd $750mil example that was thrown out there.

*I don't remember the actual number and am too lazy to look it up, but it's around there.